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Anti-Insider Trading Laws Are About Envy, Not What’s Good for the Country
Townhall.com ^ | March 20, 2020 | Gavin Wax

Posted on 03/22/2020 9:47:15 AM PDT by Kaslin

Four U.S. senators swear they didn’t use insider knowledge when they sold off stocks ahead of the coronavirus-induced record market crash. Americans are outraged, but what if so-called insider trading is a mere gimmick of the greater political establishment?

This is the age of the outsider. In politics, we have President Trump and Rep. Alexandria Ocasio-Cortez. In the economy, we have Uber and Airbnb. More than ever, being an insider carries a negative connotation.

Insider trading, then, must be nefarious. If only it had a legal definition. The U.S. Securities and Exchange Commission, that creature of Congress which acts as legislator, enforcer, and judge, defines it this way:

“...among other things, the purchase or sale of a security of any issuer, on the basis of material nonpublic information about that security or issuer, in breach of a duty of trust or confidence that is owed directly, indirectly, or derivatively, to the issuer of that security or the shareholders of that issuer, or to any other person who is the source of the material nonpublic information.”

Throw in a few Supreme Court cases, and the legalese starts to get complicated.

Essentially, the idea of making insider trading into a crime rests on the principle that information is a human right, that all market players have a right to the same information at the same time. It’s a utopian, communist notion that can’t work.

One more thought experiment before getting into these four U.S. senators.

The economist Robert P. Murphy asks what happens to a person who’s ready to buy shares of Acme, but then learns of a bad earnings report before it’s published and so decides not to buy the stock.

“Should this person be prosecuted for insider non-trading?” Murphy quips.

Some feel that it’s a different ball game altogether outside of the purely economic realm. When it comes to politicians, the public servants, our leaders, why shouldn’t anti-insider trading laws apply to them in some way?

It’s no wonder why so many Americans jumped all over the accused senators Richard Burr (R-NC), Diane Feinstein (D-CA), Jim Inhofe (R-OK), and Kelly Loeffler (R-GA). Average citizens aren’t cut any slack from the endless laws, red tape, and taxes hounding them day in and day out.

All four sold stock after being privy to information they chose to shield from their constituents, or worse, lie about to them. This is surely bad governance, but how should it be made illegal?

No constitutional rights were deprived. No property was damaged, no money stolen. Compare that to their voting records!

Now, Loeffler is a newbie, having been appointed to her Senate seat. She is awaiting a special election, but it would seem as though she’s in the fight of her life after selling over $1 million worth of stocks following a January 24 meeting of the Senate Health Committee covering the coronavirus.

Fox News’ Tucker Carlson did a solid job holding her to account. While Loeffler claims her stock market moves are all handled by a third party that updates her weeks after the fact, she evaded Carlson’s question about a March 10 video she released assuring Georgians that “the economy is strong.”

Loeffler’s message of calm and hope came less than a month after her financial advisors supposedly showed her for the first time her stock trades dating back to January 24. What’s more, Loeffler has worked in the financial industry for decades, while her husband is the chairman and CEO of the New York Stock Exchange.

Next is Burr, the chairman of the Senate Intelligence Committee. What does it take to reach such prestige? His record includes supporting the 2008 bank bailouts, withholding the 6,700-page Senate report on CIA torture, and blaming future terrorist attacks on Senators who don’t rubber stamp the most extreme mass surveillance powers.

It’s been reported that Burr sold between $628,000 and $1.72 million in stock at about the time he was being updated daily on the imminent coronavirus impact on Americans. During this time, he was co-writing an op-ed for Fox News that said, “the United States today is better prepared than ever before to face emerging public health threats, like the coronavirus.”

However, Burr follows the Hillary Clinton mantra: “You need both a public and a private position.”

Speaking at a North Carolina club where memberships run $10,000, Burr told the donor class quite the opposite, according to a leaked recording.

“There’s one thing that I can tell you about this: It is much more aggressive in its transmission than anything that we have seen in recent history,” he said, adding, “It is probably more akin to the 1918 pandemic.”

Burr went on to foretell of school closings and even the military being used when hospitals become overcrowded. However, he claims his stock sell-off was based merely on CNBC reports. It’s amazing how he read so much into public reports, while the rest of the market waited a week to crash.

Finally, we have Feinstein and Inhofe. Feinstein, together with her husband, sold up to $6 million in stocks, while Inhofe sold as much as $400,000. Like Loeffler, they have third party arrangements to handle their stock market moves.

On opposite sides of the political aisle, they unite often on the issue of war. Feinstein notoriously supervised appropriations for military contracts that benefited corporations her husband Richard Blum had strong financial interests in. Much poorer is Inhofe, who is a big war hawk anyway, be it promoting intervention in Venezuela, North Korea, Yemen, or heating up the cold war with Russia.

Do Americans actually believe they’re getting screwed over harder with insider trading than by these policies or general ineptitude and dereliction of duty?

Perhaps this media bandwagon of outrage is just too good an opportunity to miss. Who could be blamed for reveling in a story that ends with some probably crooked politicians being punished?

Unfortunately, there is a big catch that comes with this crusade against insider trading.

In addition to what has already been shown, that the absurd logic of criminalizing inside trading requires a universal human right to all market information, it should be noted that in practice, insider trading laws are simply the ruling bureaucratic elite’s means toward total power.

When someone with inside knowledge buys or sells stocks, the other trader who sells to or buys from the insider would have made the exchange anyway. There’s no victim, just as with any other voluntary transaction.

In fact, the inside trader’s buy or sell implicitly disseminates that hidden knowledge into the market, a real service for the keen observer. Millions of dollars’ worth of stock being dumped did indeed signal to other market actors that they should do the same, and some did. Not many, but a few did get out of the stock market before the crash, and they have inside trading to thank.

Insider trading is demonized no differently than how the radical left condemns “obscene profits.” The root of the attack is envy. Through envy, the state can easily move mobs in its preferred direction, and it can imprison those inconveniences, the disruptive capitalists.

“Profiting off a crisis” and similar rhetoric is an appeal to envy that Americans must see past in order to truly gain back their sovereignty.

What’s clear is that these senators lack the fortitude to be forthright with the people. And they’re not the only ones. Virtually all politicians keep up appearances of having things under control. When they inevitably lose control, because the world can’t be controlled, they overreact and overreach. Such is the story of coronavirus in America, where dependence on bureaucracy at home and abroad left millions vulnerable to disease, economic turmoil, and liberty restricted.

Now is the worst time to act on envy. This fragile society can’t handle it. Its institutions are hollowed out, the Congress being just one example of many.

The loss of public trust in institutions can be healthy when there is a moral foundation from which to rebuild. However, the reaction against these four senators is reflecting not just the low public trust, but a low social trust.

Just look at what the coronavirus scare is doing in major population centers, where there are scrimmages over toilet paper. How does the country come out the other side for the better?

If the mainstream media narrative, dripping with envy, is allowed to steer the public trust, it will have long-lasting ramifications for the country’s already declining social cohesion.

These four senators reveal deep fault lines in the political system and possibly society as a whole. The fix won’t be as simple as criminalizing insider trading.


TOPICS: Business/Economy; Crime/Corruption; Editorial
KEYWORDS: embezzlement; fraud
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To: Kaslin

This article is total tripe, and if the stock market ran that way, without insider trading laws, very few busy hardworking people would be in the market. As such, most companies would be capitalized less, and our economy would be a lot smaller.

Further, you can’t be a ‘producer’ in society, and at the same time have the amount of ‘extra’ time on your hands to compete with day traders and insiders with regards ‘information’ gathering and ‘playing the game’

This coronavirus pandemic is making some things very apparent in the world, including the relative greater importance of truck drivers, warehouse workers, farmers and other food providers, health care workers, and manufacturing facilities and the people who make them work - vs Hollywood, talking heads in the media, know nothing academics, and the majority of those pinheads who populate public office.

Someone please explain how anything the political establishment has done over the past 30 years has made us safer and stronger in the face of crises like the one we are now in? As such, what right do they have to enrich themselves at our expense? There’s no difference between a politician using insider information to enrich themselves vs a drug dealer. None. They are both self-serving selfish mercenaries.


21 posted on 03/22/2020 10:18:36 AM PDT by neverevergiveup
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To: Alberta's Child

But the thing is something a Senator says can influence the markets in a way that few people can. They should be restricted from holding stock.


22 posted on 03/22/2020 10:20:31 AM PDT by dfwgator (Endut! Hoch Hech!)
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To: Kaslin
Breach of trust defines CONgress.
23 posted on 03/22/2020 10:22:26 AM PDT by mountainlion (Live well for those that did not make it back.)
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To: Kaslin
The article that broke this noted that they did this after receiving a confidential briefing. If they had been executives at a company that sat through a confidential briefing that informed them that their profits would plummet and likely be accompanied by a big drop in the stock price and they dumped their stock, the FTC would prosecute them. Seems open and shut to me.
24 posted on 03/22/2020 10:22:46 AM PDT by RetiredScientist
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To: Karliner

It’s a Big Club, and You Ain’t In It!


25 posted on 03/22/2020 10:23:14 AM PDT by dfwgator (Endut! Hoch Hech!)
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To: elpadre

It isn’t. It was a obvious play. I had plenty of puts against the spy around the same time. This isn’t insider trading.


26 posted on 03/22/2020 10:24:21 AM PDT by Theoria (I should never have surrendered. I should have fought until I was the last man alive)
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To: Kaslin

Either it should be legal for everyone or illegal for everyone. Congress should NEVER be exempt from the crap laws that they foist upon us.


27 posted on 03/22/2020 10:25:49 AM PDT by Husker24
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To: Kaslin
Ugh. The “free market” relies on free information and the free exchange of goods. Using insider information deprives any relying on a free market (or what we try to pass off as a “free market”) from fair access.

Why are outlier loony opinions given such prominent exposure nowadays?

28 posted on 03/22/2020 10:28:08 AM PDT by Fido969 (In!)
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To: Kaslin
Selling of stock you know is gonna tank, should be charged under fraud laws the same way a manufacturer/retailer selling defective products can be liable. But buying stock you know is gonna get a big boost soon? how does that hurt anyone? When it comes to CongressCritters, though, they should be banned from anything related. They don;t only have insider knowledge, they make the laws that affect these business and can indirectly force stock prices for certain companies to go up or down. That should be the most illegal thing out of all of this!
29 posted on 03/22/2020 10:28:21 AM PDT by Svartalfiar
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To: dfwgator

Yes — that’s a whole different story. If I served in Congress I would not own securities in individual companies. I might even just limit my investments to broad index funds.


30 posted on 03/22/2020 10:29:41 AM PDT by Alberta's Child ("Oh, but it's hard to live by the rules; I never could and still never do.")
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To: Kaslin
no money stolen

Does the author have even a BASIC understanding of mathematics?
31 posted on 03/22/2020 10:30:52 AM PDT by HalfIrish
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To: Alberta's Child

But even index funds can be influenced.

I say all Congress people should divest of all investments. Too many politicians are in it for the profit as it is.


32 posted on 03/22/2020 10:31:23 AM PDT by dfwgator (Endut! Hoch Hech!)
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To: Bonemaker

This Gavin wax dirtbag is obviously involved in this crap. He belongs in prison or at the end of a rope.


33 posted on 03/22/2020 10:34:58 AM PDT by Okeydoker
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To: Kaslin
Essentially, the idea of making insider trading into a crime rests on the principle that information is a human right, that all market players have a right to the same information at the same time. It’s a utopian, communist notion that can’t work.

Without restrictions on insider trading, no one but insiders would invest in these companies. No companies would be able to sell equity because no one but the insiders would profit from it.

34 posted on 03/22/2020 10:35:15 AM PDT by Ronaldus Magnus
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To: neverevergiveup

Only Townhall would publish this garbage


35 posted on 03/22/2020 10:35:56 AM PDT by Okeydoker
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To: RetiredScientist

People are missing the elephant in the room and concentrating on the sale of the stocks. The Senate and House Intelligence committees were briefed about the seriousness of the coming viral outbreak. All of the members of the Senate and House should have put their energies and concern on the coming Wuhan Virus from China if it were so serious. Nothing happened. Were they negligent, incompetent, traitorous, ignorant or distracted from the problem headed our way? It appears to me that our self serving representatives have a larger problem than insider trading and have failed the citizens of the US.


36 posted on 03/22/2020 10:37:06 AM PDT by vetvetdoug
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To: Kaslin

Well, no. Bogus proposition.


37 posted on 03/22/2020 10:38:07 AM PDT by gogeo (The left prides themselves on being tolerant, but they can't even be civil.)
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To: Alberta's Child
The author raises some excellent points here, but the underlying premise is wrong. Laws against insider trading aren’t passed because of envy. They’re aimed at protecting the ability of these companies to publicly trade their shares — because nobody would invest in the stock market if they thought it was rigged against them.

Clearly not the case.

Lots of people trade in the stock market, even though they believe it is rigged against them.

38 posted on 03/22/2020 10:38:49 AM PDT by marktwain (President Trump and his supporters are the Resistance. His opponents are the Reactionaries.)
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To: datricker
i say we hang them

There is no chance any of them will face prison time. The worst they are facing is a fine.

39 posted on 03/22/2020 10:52:35 AM PDT by Kazan
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To: Kazan

They are in the Big Club, and we’re not.


40 posted on 03/22/2020 10:53:39 AM PDT by dfwgator (Endut! Hoch Hech!)
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